India’s Commitments to the World Trade Organisation | Economics

India has been one of the founder members of World Trade Organisation (WTO) as it signed the Final Agreement of Uruguay Round of GATT negotiations on December 15, 1993. By virtue of its membership of WTO, India became entitled to Most Favoured Nation (MFN) treatment from all the members of WTO.

As a member of WTO, India is required to meet certain obligations.

Some of the commitments that India was required to fulfill subsequent to agreement were as below:

(i) Tariff Restrictions:

Prior to the Uruguay Round only about 6 percent of the tariff lines were bound to be reduced. After assuming the membership of WTO, India had about 67 percent of its tariff lines as bound. It meant tariffs were required to be cut on those lines. India undertook to bring the ceiling limit of tariffs upto 40 percent ad valorem on the non-agricultural finished goods and upto 25 percent on intermediate goods, machinery and equipments.

In case of textiles, the phased reduction of duties was to be effected over a period of 10 years (March 1995 to March 2005). India had, however, reserved the right to revert to tariff levels existing in 1990 in case the Agreement on Textiles and Clothing did not get fully materialised or its operation got delayed. India committed to reduce duties on agricultural products with a few exceptions by 100 to 300 percent. No commitments were, however, made in respect of market- access and reduction of subsidies.

(ii) Quantitative Restrictions:

Under the WTO dispensation, any country faced with BOP difficulties could keep some measure of quantitative restrictions on imports. The committee on BOP restrictions had asked India for a phase out plan related to the quantitative restrictions. India subsequently entered into consultation with its trading partners. An agreement could be reached with those countries, except the U.S.A, to phase out the quantitative restrictions over a period of six years beginning from 1997. The United States filed a dispute with WTO in this regard.

(iii) Trade Related Intellectual Property Rights (TRIPS):

India had agreed to amend its domestic patent law in order to meet WTO requirement concerning TRIPS by April 19, 1999. A Bill to amend the Patent Act was introduced during the 1998 winter session of Parliament. Rajya Sabha had already passed it on 23rd December, 1998. It was followed up by a Presidential ordinance on January 8, 1999 to bring the domestic legislation in conformity with our obligation under Articles 70.8 and 70.9 of the TRIPS Agreement. Subsequently, the law was passed by Lok Sabha also.

(iv) Trade Related Investment Measures (TRIMS):

India assured the WTO that restrictions on trade related investment would be eliminated by January 1, 2000. Under the Information Technology Agreement (ITA), tariffs on 95 lines were brought down to zero by the year 2000. On the remaining 122 lines, tariffs had to be removed in a phased manner.

(v) General Agreement on Trade in Services:

India’s objective in service negotiations has been to offer entry to Foreign Service providers in such activities where their entry is the most advantageous for it in terms of capital inflows, technology and employment. India made commitments for the entry of Foreign Service providers in 33 activities.

(vi) Customs Valuation:

An amendment was made in India’s legislation on Customs Valuation Rules, 1998 in order to bring it into conformity with the provisions of WTO Agreement on implementation of Article VII of GATT 1994 and the customs valuation agreement.

WTO and Developing Countries:

In order to address to the special needs of the developing countries, the WTO agreements contain certain special provisions. The special aspects related to the developing countries are overseen by the Committee on Trade and Development. The provisions have been made in the WTO Agreement for rendering technical co-operation to these countries.

(1) Special Provisions in WTO Agreements:

The WTO Agreements have a number of special provisions related to needs and special problems of the developing countries.

These include:

(i) Allowing of extra time to fulfill their commitment;

(ii) Lesser liberalisation obligations;

(iii) No matching trade concession from developing countries to the developed countries;

(iv) Provision of greater market access in respect of textiles and services;

(v) Safeguarding the interests of developing countries who are adopting domestic or international measures related to anti-dumping, technical barriers to trade etc.

(vi) Provision for supporting developing countries through various means such as animal and plant health standards, assistance in the strengthening of their domestic telecommunications sectors etc. and;

(vii) Provision for safeguarding the interests of the least developed countries.

(2) Trade and Development Committee:

The member countries of WTO are required to inform it about special programmes related to trade concessions for the products from developing countries and also about regional arrangements among developing countries. The Committee on Trade and Development has been instituted to oversee the implementation of provisions favouring the developing countries, technical co-operation arrangement and increased participation of developing countries in the global trading system.

(3) Technical Assistance:

The area of technical co-operation involves the rendering of technical assistance to developing countries to enable them to operate the multilateral trading system in a successful way. In this connection, the stress is upon the building up of necessary institutions and the training of personnel. The regular, training sessions are held by the WTO on the trade policy.

However, there are several areas of serious concern for the developing countries including India.

These areas are:

(a) Provision related to TRIPS and TRIMS,

(b) Trade in services,

(c) Liberalisation of trade in agriculture,

(d) Cut upon subsidies and consequent rise in food prices,

(e) The restrictive multi-fibre agreement (MFA) on textiles and clothing.

According to some studies, Indonesia, Sub-Saharan Africa and some Caribbean countries will be poorer as a result of WTO dispensatories.

It is, of course, true that WTO has made the rules and regulations more transparent and has made it more difficult for the developed countries to take resort to unilateral action and harass the developing countries. But it has resulted in many disputes among countries—disputes between developed and developed countries, disputes between developing and developed countries and disputes between the developing and developing countries.

In fact, the World Trade Agreement has not promoted a sense of shared satisfaction but has created a sense of shared dissatisfaction among the member countries.